Summary:
Respondent moved to dismiss for lack of jurisdiction, asserting it is
not an insurer and is not subject to the jurisdiction of the Workers'
Compensation Court.

Held: The
motion is denied. The respondent is judicially estopped from asserting
it is not an insurer in light of its representations in pleadings and
motions in two prior cases that it provided coverage to the claimant in
this case.

Topics:

Estoppel and Waiver:
Judicial Estoppel. Where in two prior cases involving the claimant,
the respondent party has represented in pleadings and motions that it
provided workers' compensation coverage for claimant and was paying
him benefits, it is judicially estopped from now denying that it is
an insurer.

¶1 Through his present petition,
Ronald Beaulieu (Beaulieu) seeks medical benefits from Human Dynamics
Corporation ("Dynamics" or "HDC"), on account of an April 16, 1994 injury
he suffered while working for Eureka Pellet Mills, Incorporated (Eureka).
Dynamics moves to dismiss for lack of jurisdiction

Discussion

¶2 Beaulieu is one of a number
of claimants affected by a tangled web woven by Dynamics in the mid-1990s.
The facts concerning Dynamic's Montana activities are set out in Total
Mechanical Heating & Air Conditioning v. UEF, 2002 MT 55, 50
P.3d 108, and the decisions below, 2000 MTWCC 39, 39A, and 70. As set
forth in those decisions, in 1994 Dynamics enlisted thirteen Montana companies
in an employee-leasing scheme under which Dynamics was to act as co-employer
for the employees of the thirteen companies. Under its agreement with
the companies, Dynamics assumed responsibility for workers' compensation
coverage. However, Dynamics did not, in fact, provide workers' compensation
insurance, rather it insisted that the Montana workers' compensation laws
were preempted by ERISA. Failing in that argument, it provided faulty
documents which it insisted showed it had provided retroactive workers'
compensation coverage. This Court and the Supreme Court found that no
coverage was provided.

¶3 As a result of Dynamic's
machinations, and its failure to comply with Montana workers' compensation
laws, thirteen Montana companies were victimized; they were held to be
employers liable for workers' compensation premiums and assessed substantial
penalties amounting to more than one million ($1,000,000) dollars. Dynamics
now attempts to add to its list of victims by denying Beaulieu a forum
for pursuing workers' compensation benefits even though it has accepted
liability for his claim!

¶4 One of the thirteen Montana
companies victimized by Dynamics was Eureka, which was Beaulieu's employer.
Beaulieu's claim arose during the period Eureka was uninsured but under
contract with Dynamics. In its decision in Total Mechanical Heating
and Air Conditioning, the Supreme Court noted:

The parties agree that workers'
compensation claims filed during the UEF-claimed lapses of compensation
coverage were not paid by the UEF, but were paid by either Dynamics
or Resources [the successor to Dynamics]. Dynamics maintains
that these claims were paid under Dynamics' ERISA plan and were applied
against the deductible on the CGIC workers' compensation policies carried
by Dynamics and Resources.

2002 MT 55, ¶ 20 (emphasis
added). Beaulieu's industrial accident occurred during the period of Dynamics'
responsibility and Dynamics has been paying him workers' compensation
benefits since his injury.

¶5 Despite payment of workers'
compensation benefits to Beaulieu, Dynamics argues that this Court lacks
jurisdiction over the petition because Dynamics is not a workers' compensation
insurer and "the Supreme Court has found that program of benefits that
HDC provided to its client companies, including Eureka Pellet Mills, Inc.,
has been under ERISA." (Memorandum in Support of Motion to Dismiss at
3.) Its arguments are not only without merit, they are reprehensible.

¶6 Contrary to its contention,
the Supreme Court did not find that the benefits paid by Dynamics to injured
workers or its clients were ERISA benefits. Rather, it was Dynamics which
"maintained" that the benefits it was paying to injured workers were paid
pursuant to an ERISA plan which preempted Montana workers' compensation
laws. The preemption argument was abandoned by Dynamics in the prior proceedings
and, in any event, was utterly without merit.

¶7 Dynamics contends that the
Court nevertheless lacks jurisdiction because it is not an insurer. That
contention flies in the face of its responses, filed by its current
attorney, in two prior proceedings by Beaulieu with respect to
his April 16, 1994 industrial accident, which is the same accident at
issue in this case.

¶8 The first of the two prior
cases was brought by Beaulieu in 1995 against both Dynamics and the Uninsured
Employers' Fund (UEF). In that case, he sought an increase in temporary
total disability (TTD) benefits and payment of medical expenses. In its
answer to the petition, Dynamics alleged that it insured Beaulieu. In
subsequent filings with the Court, Dynamics indicated that it had resolved
the issues raised in the petition. Based on its motions for summary judgment
indicating that it had resolved both the TTD and medical benefits issues,
I dismissed the petition. Beaulieu v. UEF and Human Dynamics, Inc.,
1998 MTWCC 36.(1)

¶9 In the second case, brought
in 1997, Beaulieu again sought payment of medical benefits which had been
denied by Dynamics. He again named the UEF and Dynamics as respondents.
Dynamics filed a response admitting it insured Eureka and in a motion
to dismiss urged that the Court lacked jurisdiction to determine whether
Eureka was insured or not since it (Dynamics) admitted it insured the
company. Dynamics' allegations are summarized in the first two paragraphs
of the decision, as follows:

The present petition seeks
medical benefits with respect to an injury claimant suffered on April
16, 1994, while working for Eureka Pellet Mills (E.P.M.). (Petition
for Hearing.) Claimant alleges, in the alternative, that the employer
was either insured by respondent, Human Dynamics, Inc., (HDI), or was
uninsured. (Id., ¶ II.) The Uninsured Employers' Fund (UEF)
is named as a co-respondent.

HDI filed a response admitting
it insured EPM. Based on its admission of liability, it moves to dismiss
the UEF as a party. It urges that its admission divests the Workers'
Compensation Court of jurisdiction to adjudicate whether EPM was insured
or uninsured.

(1998 MTWCC 16, ¶¶ 1-2.) I
denied the motion to dismiss the UEF based on my determination that by
claiming that it insured Eureka, Dynamics could not preempt Beaulieu's
claim that Eureka was, in fact, uninsured. (Id., ¶¶ 4-5.) I made
no final determination as to insurance. As with the 1995 petition, the
1997 petition was settled and dismissed upon payment by Dynamics of the
disputed benefits.

¶10 The history of Beaulieu's
claim and my disposition of Dynamics' motion to dismiss the UEF with respect
to the 1997 petition are discussed in my decision in Total Mechanical:

The record below is replete
with evidence showing that between January and October 1994, HDC adjusted
and paid workers' compensation claims of injured employees of its client
companies, including a claim of Ron Beaulieu (Beaulieu), an employee
of Eureka Pellet Mills. On August 25, 1994, Beaulieu's attorney wrote
UEF a letter advising it that his client, Beaulieu, had been "receiving
partial disability payments from Human Dynamics Corp. in Mesa, Arizona,"
but that the payments, and medical reimbursement were not correct under
Montana law. (UEF Ex. Q at 4.) The lawyer reported that Tom Lindsey,
an HDC employee,

informed me that because
it was private insurance, Human Dynamics did not have to
submit anything to State Fund or Workers Compensation and that the
amount reimbursed to Mr. Beaulieu was correct and they were not going
to change it. [Emphasis added.]

(Id.) The record
contains a copy of a check dated June 13, 1994, in the amount of $351.10
payable to Beaulieu and drawn on an account of International Risk Management,
Incorporated, of Mesa, Arizona. (Id. at 7.) At the hearing,
Anderton testified he was president of International Risk Management,
which appears to be the claims adjusting adjunct to HDC. (Tr. at 37.)
A printed "memo" on the check indicates: "Payment; 94MT0002 TD 5/28/94
to 6/10/94." (UEF Ex. Q at 7.)

Later on, Beaulieu filed
a petition with this Court requesting an increase in his temporary total
disability benefits and payment of certain medical expenses. He named
the UEF and HDC as respondents. (See Id. at 11-13.) HDC appeared,
affirmatively alleged that it (HDC) insured Eureka Pellet Mills,
and moved to dismiss the UEF as a party. I denied the motion,
holding that since the claimant alleged in the alternative that Eureka
Pellet was uninsured the Court had jurisdiction to determine whether
the UEF was liable for benefits, which in turn required a determination
as to whether Eureka Pellet in fact was insured or not. (Beaulieu
v. Uninsured Employers' Fund and Human Dynamics, Incorporated,
1998 MTWCC 16 at ¶ 5; UEF Ex. Q at 47.)

(2000 MTWCC 39, ¶¶ 44-45 (emphasis
in the original).)

¶11 The present motion to dismiss
flies in the face of Dynamics' judicial admissions in both the 1995 and
1997 cases. In both of the prior cases, Dynamics admitted it insured Beaulieu's
employer and that it is liable for workers' compensation benefits payable
on account of claimant's 1994 injury.

¶12 In its response to the
1995 petition, Dynamics admitted the following facts:

¶12a That on April 16, 1994,
the Petitioner suffered an industrial injury arising out of and in the
course of his employment with Eureka Pellet Mills, Inc., of Eureka,
Montana.

¶12b That at the time of
the injury, the Employer was insured under the provisions of
the Montana Workers' Compensation Act through Human Dynamics, Inc.

(Beaulieu v. UEF and Human
Dynamics, Inc., WCC No. 9512-7463, Response to Petition at 1-2.)
Dynamics thereafter filed a motion for summary judgment urging that the
petition was moot because it had adjusted the rates of his indemnity benefits
to accord with Montana workers' compensation requirements and had paid
the disputed medical expenses. The motion resulted in dismissal of the
petition.

¶13 In its response to the
1997 petition, Dynamics again admitted it insured Beualieu's employer
and had accepted liability for his claim. Its admissions were nearly identical
to its admissions in the 1995 action. In its response, it admitted:

¶13a That on April 16, 1994,
the Petitioner suffered an industrial injury arising out of and in the
course of his employment with Eureka Pellet Mills, Inc., of Eureka,
Montana.

¶13b That at the time of
the injury, the Employer was insured under the provisions of
the Montana Workers' Compensation Act through Human Dynamics, Inc.

¶13c That the Respondent,
Human Dynamics, Inc., accepted liability for Petitioner's industrial
accident and has paid temporary total disability benefits to the Petitioner
during this period of time. The Petitioner, through his attorney,
has requested the Respondent to pay the Petitioner's biweekly benefits
on a timely basis.

¶14 Even more telling is Dynamics
Motion to Dismiss the UEF from the 1997 action. That motion was based
on its admission that it had accepted liability for Beaulieu's claim.
In its supporting memorandum, Dynamics stated:

The Petitioner [Beaulieu]
has been receiving, and has been accepting, biweekly compensation benefits
from Human Dynamics for almost four years now. The Petitioner has been
receiving, and has been accepting medical benefits from Human Dynamics
for almost four years now. In the pleadings in the instant matter,
Human Dynamics has admitted that Eureka Pellet Mills was insured through
Human Dynamics. That is all that should be necessary to establish that
Human Dynamics is responsible for any benefits awarded to the Claimant,
and that the Uninsured Employers Fund has no standing in the matter
and is not a proper party to the matter. [Emphasis added.]

(Id., Memorandum In
Support of Motions to Dismiss for Lack of Jurisdiction(2)

at page 4.)

¶15 I note here that the attorney
who signed all of the responses to the petitions in both prior cases,
who signed the memorandum in support of the motion for summary judgment
in the second case, and who represented Dynamics throughout both prior
cases is the same attorney who now moves to dismiss the present petition
for lack of jurisdiction based on an assertion that Dynamics is not an
insurer and is therefore not subject to the Court's jurisdiction. I take
judicial notice of the Court files in both cases and have directed the
Clerk of Court to make certified copies of the complete Court files in
both cases and make them part of the record in this case.

¶16 This brings me to the present
motion to dismiss. Dynamics correctly notes in its Reply Memorandum in
Support of Motion to Dismiss, that a challenge to a Court's subject matter
jurisdiction can be raised at any time and cannot be waived. But the issue
in this case is not subject matter jurisdiction: Beaulieu is seeking workers'
compensation benefits and the Court has exclusive jurisdiction over his
request. Rather, the issue is whether Dynamics is a proper party. That
issue is one involving in personam jurisdiction. Lack of personal
jurisdiction is a defense which can be waived. Harland v. Anderson
Ranch Co., 2004 MT 132, ¶ 31, fn. 1. On grounds of judicial
estoppel, I find that Dynamics has waived any objection which is based
on an assertion that it is not an insurer over which the Workers' Compensation
Court has jurisdiction.

"The fundamental purpose
of judicial estoppel is to protect the integrity of the judicial system
and thus to estop a party from playing 'fast and loose' with the court
system." Kauffman-Harmon v. Kauffman, 2001 MT 238, ¶ 15, 307
Mont. 45, ¶ 15, 36 P.3d 408, ¶ 15. "[T]he doctrine of judicial estoppel
binds a party to his or her judicial declarations, and precludes a party
from taking a position inconsistent with previously made declarations
in a subsequent action or proceeding." Kauffman-Harmon, ¶ 15.
In Kauffman-Harmon, we examined the doctrine of judicial estoppel
as it applies to resulting and constructive trusts. In that case, we
determined that when Dr. Kauffman claimed in a previous legal action
that he had no interest in certain assets that he had transferred to
a corporation, he was barred from claiming an interest in the assets
in a subsequent proceeding. Kauffman-Harmon, ¶ 17.

¶18 Four elements must be satisfied
to judicially estop a party from taking a position inconsistent with a
prior position. First, the estopped party must have had knowledge of the
facts at the time the party took the original position. Second, the party
must have succeeded in maintaining the original position. Third, the original
position must, in fact, be inconsistent with the position taken in the
present case. Fourth, and finally, the original position must have misled
the adverse party such that allowing the estopped party to change position
would injure the adverse party. Stanley L. and Carolyn M. Watkins
Trust v. Lacosta, 2004 MT 144, ¶ 33.

¶19 All four elements are satisfied
in the present case. First, Dynamics had knowledge of the facts as to
whether it was an workers' compensation insurer or not. If not a de
jure insurer it has certainly acted as a de facto insurer.
If it believed that it was not a workers' compensation insurer subject
to this Court's jurisdiction, then its representations to the Court in
the 1995 and 1997 actions amounted to a deliberate fraud upon the Court.
Second, Dynamics was successful in getting both actions dismissed by representing
it insured Beaulieu; then accepting or settling his claim for benefits
so as to moot both of his petitions.(3)
Third, Dynamics motion to dismiss in the present case is patently inconsistent
with its position in the prior case. Fourth, and finally, Beaulieu has
plainly relied on Dynamics' representations in the prior cases and changed
his position to his detriment. He accepted benefits from Dynamics and
allowed his prior actions claiming that his employer was uninsured and
naming the UEF as the responsible party for his benefits to be dismissed.
It is also apparent from the pleadings, motions, and briefs filed herein
that he has continued to rely on Dynamics for his workers' compensation
benefits. It should be clear from this discussion that Dynamics is, in
fact, "playing fast and loose with the court system."

¶20 Dynamics has admitted liability
for the workers' compensation benefits to which Beaulieu is statutorily
entitled. Its attempt to deny him a forum to litigate the proper amount
of those benefits is not only unreasonable on its face, it is reprehensible.
If I were to adopt its position, Beaulieu would be left with no remedy
in disputes involving his benefits and would be forced to look to the
UEF and Eureka for satisfaction of his claim, thus leading to renewed
litigation in district court and this Court. Dynamics would then have
succeeded in further victimizing the claimant, Eureka, and the State of
Montana.

¶21 I find the motion to dismiss
not only without merit under the facts outlined above, but outrageous.
The motion is denied.

¶22 It is further ordered that
Dynamics shall file its response to the petition on or before August 18,
2004.

DATED in Helena, Montana,
this 10th day of August, 2004.

(SEAL)

Mike McCarter
JUDGE

c: Ms. Laurie Wallace
Mr. Andrew J. Utick
Submitted: August 4, 2004

1. In both
my decisions, I referred to respondent without distinguishing between
the respondent UEF and respondent Dynamics. However, the context of my
decisions, as well as my file review, show that the respondent referred
to was Dynamics, not the UEF.

2. The lack
of jurisdiction issue was limited to whether the UEF was a proper party
and whether the Court could consider an allegation that Eureka was uninsured.
The whole purpose of Dynamics' motion was to avoid litigating the insured
status of the employer. Dynamics tendered itself as an insurer which had
accepted liability for Beaulieu's claim.

3. The 1998
petition was dismissed by agreement after Dynamics and Beaulieu settled
the amounts Beaulieu claimed were due him and Dynamics sent him a check
for the settlement amount. See Court file in Beaulieu v.
UEF and Human Dynamics, WCC No. 9712-7880.